United States: Texas Supreme Court Determines Private Entities That Contract With Government Are Not Subject To The Texas Public Information Act

In a recent six to three decision, the Texas Supreme Court overturned a long-standing Texas Attorney General and lower court position that chambers of commerce and certain other private entities were subject to the Texas Public Information Act. Greater Houston P'ship v. Paxton, No. 13-0745, 2015 Tex. LEXIS 614 (Tex. June 26, 2015). At stake in this decision was the powerful statutory objective of the Act assuring that governmental entities conduct the public's business transparently versus the equally important privacy rights that belong to private entities in Texas.

The Supreme Court specifically looked at whether the Greater Houston Partnership (GHP) was a "governmental body" subject to the Act. The Act defines a "governmental body" to include "the part, section, or portion of an organization, corporation, commission, committee, institution, or agency that spends or that is supported in whole or in part by public funds."¹

GHP is a private, nonprofit corporation that provides economic-development services for a ten-county area around Houston and functions like a chamber of commerce. Like other chambers of commerce, it must compete aggressively to attract and negotiate the entry of businesses to its area. Economic development is a highly competitive endeavor, one that requires protection of privacy rights.

The Supreme Court determined that GHP is not a "governmental body" subject to the Act's disclosure requirements because it is not wholly or partially sustained by public funds.

Greater Houston Partnership Background

GHP promotes regional economic growth and a welcoming environment for business by providing consulting, event planning, and marketing services to approximately 2,100 member companies.²

For several years, GHP contracted with the City of Houston to provide similar services.³ In May 2008, Jim Jenkins, a Houston-area resident, requested financial information from GHP, claiming that GHP was subject to the Act because it received public funds.⁴ GHP argued that the public funds it received from the City of Houston were compensation for services performed pursuant to the contract.⁵ The Attorney General's Open Records Division concluded that GHP was a "governmental body" because its operations were "supported" by the City of Houston.⁶ GHP filed a declaratory judgment action against the Attorney General.⁷ The trial court agreed with the Attorney General's Open Records Division and found that GHP was a "governmental body."⁸ The court of appeals affirmed the trial court's decision.⁹ The Supreme Court reversed and rendered judgment for GHP.¹⁰

What Does it Mean to be "Supported" by Public Funds?

The Supreme Court's determination of whether GHP is a "governmental body" subject to the Act's disclosure requirements focused on whether GHP was "supported in whole or in part by" public funds. The Supreme Court notes that GHP clearly received public funds based on its contract with the City of Houston, so the question boiled down to the shorter phrase, "... supported in whole or in part by..."¹¹

GHP argued that the Act should not apply to private entities that contract with governmental bodies to provide services pursuant to an agreement.¹² The Supreme Court agreed that the phrase "'supported in whole or in part by public funds'" [identifies] entities that were created or exist to carry out government functions and whose existence are maintained in whole or in part with public funds."¹³

The Supreme Court focused on the Act's plain language and statutory context in determining the meaning of "supported."¹⁴ It examined different meanings of the word, eventually concluding that "supported" must mean sustenance, maintenance, or both.¹⁵ Further, the Supreme Court considered the statutory context and purpose of the Act, which states that the Act allows access to information so the public can "retain control over the instruments they have created." ¹⁶

The Supreme Court ultimately determined that "supported" could not mean maintenance without requiring disclosures from a private entity that received any public funds.¹⁷ Rather, "supported" must mean sustenance.¹⁸ Using this definition, "only an entity ... whose existence is predicated on the continued receipt of government funds would qualify as a 'governmental body.'"¹⁹ While Open Government laws are always to be liberally construed to best foster their public purpose, the Court observed that such construction does not permit an interpretation that is "... untethered from its statutory moorings."²⁰

The funds GHP received from the City of Houston accounted for less than 8% of its total annual revenue.²¹ Further, of the approximately 2,100 companies that comprise GHP's membership, only four are governmental bodies.²² Consequently, the Supreme Court determined GHP was not "supported" by the public funds it received from the City of Houston.²³

The Takeaway

The Attorney General and the lower courts regularly relied upon Kneeland v. National Collegiate Athletic Ass'n, 850 F.2d 224 (5th Cir. 1988) in deciding these type of cases. However, the Supreme Court determined that the language of the Act was unambiguous and, therefore, reliance on Kneeland was inappropriate.

The Supreme Court admitted that determining whether a partially funded entity qualifies as a "governmental body" will require case-specific analysis and examination of facts.²⁴ Generally, however, "an entity, like GHP, that does not depend on any particular revenue source to survive—public or private—is not sustained even in part by government funds."²⁵

The crux of the Supreme Court's holding in Greater Houston Partnership is summed up by the following: "[W]e define 'supported in whole or in part by public funds' to include only those private entities or their sub-parts sustained, at least in part, by public funds, meaning they could not perform the same or similar services without the public funds."²⁶

Subsequent to the Supreme Court's ruling, Strasburger has obtained two favorable rulings from the Office of the Attorney General based upon further arguments supporting a chamber's exemption from the PIA. Chambers of commerce should analyze the level of support they receive from public funds, but, generally, the Greater Houston Partnership decision empowers chambers of commerce and other similarly structured private entities to avoid disclosure of private information. However, for the foreseeable future chambers of commerce should still consider submitting written open records requests to the Office of the Attorney General within 10 business days of their receipt in order to confirm application of this case and the exclusion from producing private information.

Footnotes

^{1 TEX. GOV'T CODE § 552.003(1)(A)(xii).}

^{2 Greater Houston, 2015 Tex. LEXIS 618, at *3.}

^{3 Id.}

^{4 Id. at *4.}

^{5 Id.}

^{6 Id. at *4-5.}

^{7 Id. at *5.}

^{8 Id.}

^{9 Id. at *6.}

^{10 Id. at *26.}

^{11 Id. at *10.}

^{12 Id.}

^{13 Id.}

^{14 Id. at *11.}

^{15 Id.}

^{16 Id. at *12 (quoting TEX. GOV'T CODE § 552.001(a)).}

^{17 Id. at *13.}

^{18 Id.}

^{19 Id.}

^{20 Id. at *11.}

^{21 Id. at *4.}

^{22 Id.}

^{23 Id. at *18.}

^{24 Id. at *18.}

^{25 Id.}

^{26 Id. at *18.}

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